Boots, which operates a chain of pharmacies in the UK, incurs the following costs:

a. Cost of redesigning blister packs to make drug containers more tamperproof.

b. Cost of videos sent to doctors to promote sales of a new drug.

c. Cost of website’s ‘frequently asked questions’ for customer enquiries about usage, side-effects of drugs, and so on.

d. Equipment purchased by a scientist to conduct experiments on drugs yet to be approved by the government.

e. Payment to actors on a feature to be shown on television promoting new hair-growing product for balding men.

f. Labour costs of workers in the packaging area of a production facility.

g. Bonus paid to a salesperson for exceeding the monthly sales quota.

h. Cost of the courier service to deliver drugs to hospitals.

Required

Classify each of the cost items in parts a–h into a component of the value chain shown in Exhibit1.4.

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Exhibit 1.4 The value chain of business functions Research Product/service/ Customer and Production Marketing Distribution process design service development Management accounting